SOLUTIONS FREE MARKET
APRIL/MAY 2018, VOLUME I, ISSUE 1
HEALTHCARE
BETTER BENEFITS LOWER COSTS
MEET THE BUSINESSMAN AND DOCTOR WHO ARE
CHANGING THE WAY YOU BUY HEALTH CARE
HOW TO “FREE MARKETIZE” YOUR PLAN
DPCs & SELF-INSURED EMPLOYERS: A NEW PARADIGM IN PRIMARY CARE
FREE MARKET MAVERICKS: JAY KEMPTON AND DR. KEITH SMITH
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SOLUTIONS FREE MARKET
P R E M I E R E I SS U E
HEALTHCARE
A P R I L / M AY 2 0 1 8 VOLUME I, ISSUE 1
CO N T E N TS A publication designed exclusively for employers and patients as Buyers of healthcare and members of the Free Market Medical Association. Our Mission: To promote, educate, and support the Healthcare Revolution, which will bring about true healthcare reform, based upon Buyers and Sellers working together in a mutually beneficial way, without the interference of the government or valueless third parties. Our Standard: Quality is never an accident; it is always the result of high intention, sincere effort, intelligent direction and skillful execution; it represents the wise choice of many alternatives. -William Foster ON THE COVER: In 2014, Jay Kempton, President and CEO of The Kempton Group, a family-owned Third Party Administrator and Dr. Keith Smith, co-founder, CEO and Medical Director of the Surgery Center of Oklahoma combined forces to create the Free Market Medical Association; a group dedicated to promoting and applying free market principles to the healthcare industry.
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Free Market Healthcare Solutions | Vol. I | Issue 1
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How to “Free Marketize� Your Plan
Self-Funding & Bundling:
Saving Big on Surgical Procedures
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DPCs & Self-Insured Employers: A New Paradigm in Primary Care
Free Market Pioneers:
Dr. Chris Larson, Euphora Health
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Free Market Mavericks: Changing the Way You Buy Healthcare
Saving the Fiduciary From Themselves
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Finding A Free Market Friendly TPA
FMMA Chapter Directory
Online at www.USHealthMedia.com 3
SOLUTIONS FREE MARKET
HEALTHCARE
BETTER BENEFITS LOWER COSTS
STAFF PUBLISHER Cathy Payne cpayne@ushealthmedia.com EDITORIAL MANAGER Megan Freedman megan@FMMA.org GRAPHICS / PRODUCTION Ann Marie Ludlow aludlow@ushealthmedia.com Elysia Wright Davis edavis@ushealthmedia.com SENIOR MARKETING DIRECTOR Ben Daniel wbendaniel@ushealthmedia.com ADMINISTRATION / ACCOUNTS RECEIVABLE Debbie Tolliver dtolliver@ushealthmedia.com CIRCULATION Tom Higgs circulation@ushealthmedia.com CONTRIBUTING WRITERS J. Wayne Kempton, Dr. Richard A. Kube II, Dr. Robert Nelson, Ron E. Peck, Esq. Free Market Healthcare Solutions welcomes FMMA members to submit articles, information, opinions, or ideas that enhance the mission of this publication. Please submit contributions to info@USHealthMedia.com or megan@FMMA.org. For information about becoming a member of the Free Market Medical Association, visit: FMMA.org.
FREE MARKET HEALTHCARE SOLUTIONS © 2018 Published bi-monthly by Fidelis Publishing Group, LLC P.O. Box 217 • Jarrell, TX 76537 No part of this publication may be reproduced, translated, stored in a database or retrieval system or transmitted in any form by electronic, mechanical, photocopying, recording or other means, except as expressly permitted by the publisher. For permission contact Publisher@USHealthMedia.com. POSTMASTER: Send address changes to Free Market Healthcare Solutions Subscriptions. P.O. Box 217, Jarrell TX 76537 Articles and written content are the property of Fidelis Publishing Group, LLC, or are used with permission of the contributing authors as noted in the publication. Photos and graphics not otherwise credited are property of Fidelis Publishing Group, LLC.
free market
MINUTE
BY MEGAN FREEDMAN
The goal of this publication and the Free Market Medical Association is to expose the corruption, educate you on what you can do to protect your plan, and introduce you to the good guys in healthcare.
Today should be a national holiday. Why? Because it is the day the first issue of Free Market Healthcare Solutions hits your desk! This publication was created for you, the self-funded employer, with the objective of helping you lower your claims costs, reduce your risk, and offer better benefits through embracing the free market in your health plan. Every month, this column will include news and information about this movement that will affect you. Transparency is vital to a self-funded health plan. For too long, employers have had to rely on networks and third parties to manage their plan. Many no longer work for the employer, but instead with unscrupulous hospital systems and providers to keep costs high. To quote Dr. Keith Smith, “The jig is up.” Healthcare systems are masking revenue streams, taking federal dollars to reimburse themselves for ‘uncompensated care’, and relying on political favors to maintain monopoly status. They are bankrupting patients and self-funded health plans while claiming imminent bankruptcy. PPO networks negotiate a percentage off billed charges from these providers, but keep a piece of this discount, along with your access fee. Their contracts are “proprietary”, and providers are coming forward with tales of negotiating misconduct. Insurance carriers masquerading as Third Party Administrators (ASOs) are rewarded when Plan costs are high. Like the PPO networks who are taking a portion of ‘savings’ as an additional revenue stream, all ASOs, and many other TPAs have similar pricing strategies, and bury these fees in layers of legalese in their contracts. Employers keep hiring more and more vendors who claim to have quick fixes, only to see their costs rise
every year. These third parties and vendors are being paid by other third parties and vendors to not work in your best interest. For a self-funded employer, these costs are not monopoly money. The cost increases can mean the difference between paying claims verses giving raises, buying new equipment, or increasing staff. One goal of this publication, this monthly column, and FMMA is to expose the corruption, educate you on protecting your plan, and introduce you to ‘the good guys’ in healthcare. The idea of connecting self-funded employers with free market facilities was born when a free market surgery center owner and a gimmick-hating Third Party Administrator CEO became friends. Dr. Keith Smith from the Surgery Center of Oklahoma had bundled, transparent pricing for cash pay patients. Jay Kempton of The Kempton Group provided TPA services for self-funded employers. Self-funded employers are essentially cash paying customers! They worked together to create a strategy that would enable employers to pay the Surgery Center of Oklahoma’s cash price. Prices were so much lower, and quality so much better, that employers could pay the cost at 100% and still save money. The success and expansion of this idea led Smith and Kempton to found the FMMA. The association connects buyers and sellers to reduce costs and increase quality. Our members include self-funded employers, cash pay patients, free market-friendly facilities and physicians, and select, approved facilitators and vendors. To use our Shop Health pricing search tool and learn more about the Free Market Medical Association, go to FMMA.org.
Megan Freedman has worked with self-funded benefit plans for more than 15 years. For the
past 12 years, she has worked with The Kempton Group serving as the Vice President of Corporate Communications. Ms. Freedman has extensive experience not only in employee benefits, but also marketing, sales, account management, executive support, and member services. Ms. Freedman is the Executive Director of the Free Market Medical Association. She was recently featured on Kevin Price’s Pricing in Business Radio show and writes and co-authors many articles, white papers, and educational materials. She is licensed in Life, Health, and AD&D in Oklahoma and Texas.
Free Market Healthcare Solutions | Vol. I | Issue 1
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How to “FREE MARKETIZE” Your Plan
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any healthcare providers and hospital systems have a great deal invested in the status quo of healthcare. It is becoming widely known that many healthcare systems are masking revenue streams, taking federal dollars to reimburse themselves for ‘uncompensated care’, and relying on political favors to maintain their monopoly status. Meanwhile, they are bankrupting patients and self-funded health plans while continuously claiming imminent bankruptcy. Self-funded employers have been forced to rely not only on PPO networks to give a percent off billed charges from these providers, but also on Third Party Administrators who often are rewarded when Plan costs are high. Like the PPO networks, who are taking a portion of the ‘savings’ as an additional revenue stream, many TPAs have similar business strategies. For a self-funded employer, these costs are not paid with Monopoly money. These cost increases can mean the difference between having to increase Plan funding verses giving raises, buying new equipment, or increasing staff. Incenting employees to use providers who offer up front, transparent, bundled, cash-based pricing can save that employer millions of dollars in claims in just a few years. The free market movement in healthcare is vital to fixing the problems with our country’s current healthcare delivery system. Healthcare transparency provides you and your employees with the
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information and the incentive to choose healthcare providers based on value. Value is not just about price, but rather price and quality. You and your employees are inundated with media, advertising, and hype that incorrectly conveys that valuable healthcare has to be expensive; the highest quality care will cost more, or that the cost should be ignored. However, the quality of healthcare is not related to the price in the way consumers are taught to shop for other goods and services. Better quality care is almost always delivered at a lower price. High quality and low complication rates combined with efficiency, enables these providers to charge far less than a low value competitor. For a self-funded employer, being part of the free market movement is very important to the longterm success of your Plan. Competition in healthcare delivery is the key to sustaining affordable, quality benefits for your employees. As a Plan Fiduciary under ERISA, it is important for you to pay attention to where your claims dollars are going, and whether these charges are reasonable. Complying with the fiduciary responsibilities outlined in ERISA is becoming a hot topic for the Department of Labor. Embracing bundled, cash-based pricing that is not based on ‘a discount off’ an unknown starting point is crucial to fulfilling the fiduciary responsibility of being self-funded and using health Plan dollars to only pay for reasonable costs. Free Market Healthcare Solutions | Vol. I | Issue 1
STEP 2: WHAT DO YOUR CONTRACTS SAY? Self-funded employers must read all of their contracts carefully. If a vendor includes language that prohibits you from acting in the best interest of your Plan (and thereby complying with your fiduciary obligations under ERISA), these contracts should be modified, or the vendor replaced. Commonly, PPO networks have language that
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STEP 3: INCORPORATE FREE MARKET FACILITIES AND PHYSICIANS This is not as difficult as it sounds. There are surgical facilities, imaging providers, direct primary care physicians, and other medical providers at all levels who would love to do business with you in an open and honest way outside of the PPO networks. There are many free market programs you can purchase (check how the vendor offering them is compensated) that assist you with this, but depending on your location and needs, it may not be necessary. You can learn more about this at fmma.org and in future issues!
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Finding the right “facilitators” or “vendors” can greatly impact your Plan. What value do your current vendors provide? In what way, and how much, do they get paid? Have they embraced the free market and advise you to use Plan assets in the most prudent way? Do they understand that network/PPO discounts have no real-world value? Seek out find brokers/consultants who believe the free market is important to your Plan and understand that transparency is important in their business as well. Are you using an ASO (carrier) as your TPA? TPAs generally have multiple revenue streams, from commissions on a stop loss policy, to percentage of savings on out-of-network or thirdparty recovery. Insurance carriers masquerading as ASOs are able to find even more ways of hiding their compensation (especially if they also own the network, the stop loss carrier, PBM, etc.). Even though many of these revenue streams are considered standard industry practice, they are not transparent, nor are they in the best interest of the self-funded employer. ERISA requires that self-funded employers use Plan assets only for reasonable expenses. The inability to quantify the exact compensation paid to their TPA puts employers in a non-compliant position with ERISA, and may violate the employer’s fiduciary responsibility to the Plan. Getting an automatic windfall when the client has a poor claims year puts your TPA at odds with your best interest.
prohibits you from reviewing specific claims, negotiating directly with providers, etc. Many ASOs have language that not only makes your data their property, but also language that gives them the right to make claim determinations outside of what is included in your Plan Document. Your TPA and Agent/Broker should not be signing any contracts on your behalf since they are not the Plan Administrator.
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STEP 1: DETERMINE WHO IS MINDING YOUR DOLLARS?
STEP 4: INCENTIVIZE YOUR EMPLOYEES TO BUY BETTER Many employers are incorporating free market facilities and Direct Primary Care into their plans and waiving all out of pocket costs for employees. The pricing is so much better that these employers are lowering their attachment points, lowering their reinsurance premiums, and most importantly, significantly impacting their claims spend. We will talk more about this in upcoming issues! Protecting your Plan and reducing your claims costs is not rocket science or a gimmick. The ideas and strategies outlined in this publication will help you learn how to incorporate these ideas and set you on a path to long term success. All it takes is just a little bit of know-how, the guts to challenge the status quo, and the determination to go in a new direction!
J. Wayne Kempton is the President and CEO of The Kempton Group; one of the founding members of the Free Market Medical Association; a board member of the Society of Professional Benefit Administrators; and a member of the Health Care Administrators Association. Mr. Kempton has a Bachelor of Science degree in Business Administration from Oklahoma State University and is Life, Health, AD&D, and Property and Casualty Insurance licensed in multiple states.
Free Market Healthcare Solutions | Vol. I | Issue 1
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PA R T 1
SELF-FUNDING & BUNDLING: SAVING BIG ON SURGICAL PROCEDURES
APPLYING FREE MARKET VALUES
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to Spine and Orthopaedics by dr. richard kube
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eality today is that business owners are large healthcare consumers, and their expense associated with healthcare consumption is rising rapidly. Implementation of transparent, bundled pricing can create a free market wherein businesses purchase greater value, and depending upon company size, can save hundreds of thousands, if not millions, of dollars annually. For example, a single spine fusion in a transparent, bundled free market model can save over $100,000 for a self-insured business. Unfortunately, that savings does not occur in mainstream healthcare because it is anything but transparent; consumers do not know the cost, nor do they truly understand what they are buying. Realistically, healthcare consumers are purchasing a desired or expected result of treatment for an ailment, which is a concept more easily grasped. However, expected results and outcomes data is not easy to find or to interpret. Translating healthcare industry jargon into information the public can process, and transforming healthcare into a free
market, should have the desired result of providing value for the consumer and a fair price for the service provider. In the coming issues, we will investigate some key concepts which will better enable purchasers of healthcare to understand what value
looks like and where to find it. We will explain transparency of price, which is nonexistent in the healthcare mainstream. In Spine and Orthopaedics, many procedures are often offered as a “bundle”, but hidden costs remain for additional persons and “unforeseeable events.” A true bundle should allow the
Richard A. Kube II, MD, FACSS, FAAOS, CIME is a fellowship trained spine surgeon and Founder/Owner of Prairie Spine & Pain Institute, in Peoria, Illinois. He also founded and owns Prairie Surgicare, an AAAHC certified surgical facility. He holds Board Certifications from the American Board of Spine Surgery, American Board of Orthopaedic Surgery and American Board of Independent Medical Examiners. His practice is dedicated to providing comprehensive operative and non-operative treatment for spinal ailments with a special interest in minimally invasive surgical techniques. Dr. Kube is also engaged in active research and education projects. His interests extend into strategic planning and entrepreneurship as he is Advisor to Twisted Sun Innovations, a Hydrogen energy company currently working on renewable energy solutions for the U.S. Department of Defense. Dr. Kube currently serves as clinical faculty at University of Illinois College of Medicine at Peoria.
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business owner to know the absolute total cost of After going through these topics, we will an entire episode of care. Only then can he or she summarize the highlights of some important plan for that financial burden. We will examine components of health care transparency as they the types of questions to ask to help determine relate to surgical specialties, specifically Spine what is actually included within a bundled service and Orthopaedics. We will demonstrate how a 9 rate. Multiple providers include asterisks as part of transparent, bundled pricing model can generate their “all in” pricing. It is important to know what is significant savings for businesses, especially those behind those asterisks and what additional financial who are self-insured. The goal of this series is to burden you may encounter on the back end after a educate you the reader so that you will be armed service has been provided. We will briefly discuss with some basic tools to empower yourself as a cost effectiveness of procedures. The concept of true healthcare consumer. Navigating healthcare cost per quality adjusted life year (QALY) will be does not need to be hard. It is just kept that way described to illustrate some more complex factors so that control of the market may be maintained to consider when gauging the full burden cost of a and manipulated by the few, and their cost may treatment plan or procedure over time. be passed down to you. The goal of the Free The QALY concept provides a natural transition Market Medical Association, its members, and the into discussing outcomes. Just as all procedures movement they are leading is to open the healthcare or treatment plans are not the same, neither are market and to facilitate connections between buyers the health care providers. Understanding what and sellers of services in a way that is seldom seen questions to ask is critical when deciding from whom today. Welcome to the healthcare revolution! you would purchase healthcare. We will describe different types of metrics to consider when trying to assess provider merit. As with price, medical providers should be able to tell you what types of outcomes they have, what are their complication rates and other related metrics in a prompt Dramatically Lowering Costs for Home Medical Equipment and Services concise manner. 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In a world full of Edisons
Choose Tesla Self-Funded employers working directly with Free Market Providers. That’s right. We invented it. The Kempton Premier Provider program began when CEO Jay Kempton and Dr. Keith Smith got together to discuss the cost of care and strategies to reduce it. When Dr. Smith realized that self-funded employers really were cash pay buyers, an idea was born; allowing these employers to utilize the bundled cash prices at free market friendly facilities was a win, win, win for everyone. Since 2011, this program saved millions of dollars for our clients and their employees.
At Kempton, transparency is not a buzz word. It’s a way of life. A fully transparent third-party administrator who believes in promoting and supporting transparent, free market providers is a game changer for a self-funded employer. We are that TPA. Kempton is working with free market partners to fix the healthcare system, encouraging and promoting all free market providers who believe we can change the way people make healthcare purchasing decisions.
Co-Founder
kemptongroup.com | kppfree.com
PA RT 1
A
MARRIAGE
MADE
IN
H E A LT H C A R E
HEAVEN!
DPC AND SELF-INSURED EMPLOYERS:
A N E W PA R A D I G M F O R P R I M A R Y C A R E 11 by dr. robert nelson
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Dr. Robert Nelson received his M.D. degree at the Ohio State University College of Medicine. He is the Founder and Owner of Encompass Health Direct, in Cumming, Georgia; the publisher and editor of The Sovereign Patient blog; and a founding member and spokesperson for the Georgia chapter of the Free Market Medical Association. Dr. Nelson has spoken about healthcare economics and free market healthcare throughout the country, and has been a guest expert on multiple radio programs.
Free Market Healthcare Solutions | Vol. I | Issue 1
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documentation which is necessary for coding, which in turn, is necessary for the billing. And around and around it goes, with the emphasis on the volume of patients, as opposed to the outcomes! The focus tends to be on the coding, not the caring; not to mention the huge time drag spent documenting for the sake of justifying the coding level. With the obvious shortcomings of our current system in mind, you put together a list of “musthave” characteristics that the new primary care model must possess. Fundamentally, the new care model should be attractive to both patients and physicians, for the right reasons. The incentives for the providers should be aligned such that the natural motivation is to provide the right care, at the right time, in the right setting – not an emphasis on billing, thus patient volume, to drive revenue. Next, the person or entity
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As an active participant in the U.S. healthcare system for several decades, you are acutely aware of the moral hazards of our insurance-based Fee-forservice payment system, in which financial incentives for physicians are tied to volume rather than quality. Moreover, the coding and billing of patient encounters is essentially the only way to generate revenue. This insurance billing process has been referred to as “Fee-for-coding”, which turns out to be a more descriptive term than Fee-for-service as it pertains to medical billing. After a thorough study of the issue, you’re convinced that the insurance-based payment model creates misaligned incentives, often leading to misplaced priorities. This “Fee-for-coding” system fosters a natural inclination for “patients to chase the benefits and for doctors to chase the codes.” On the provider side, the emphasis is on the
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magine that you’ve just been named as the Healthcare Czar of the United States. Your mandate is to achieve highly effective primary care. The roadmap to effective primary care includes eliminating barriers between physicians and patients, including bureaucratic inefficiencies, while simultaneously decreasing the over-all cost of primary care.
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paying for the service should be able to discern the economic value by benefit of knowing prices in advance of care. Finally, the patient-physician relationship, and the collaborative therapeutic dynamic that emerges from that relationship, should always be at the forefront, while insulating that relationship from outside interference as much as possible. Pragmatically, the new model for primary care should be simple to implement, with no steep learning curves or expensive start-up costs. It should be scalable, working just as well on a large platform as in an isolated situation. Additionally, it should be self-sustaining, attracting participants and
capital because of its high value proposition. For sustainability, price transparency is a must. And finally, phase-in should be rapid, eventually accessible to everyone as it expands and scales. The model is starting to take shape in your mind, but how should we pay for it? On the cost side, you recall a fundamental insurance principle your first financial advisor drilled into your head repeatedly. Every time you met he would say, “Never insure what you expect to lose and what you can afford to pay for.” To insure these routine items, he emphasized, is an inefficient use of resources and a very expensive way to finance lesser
expenditures. This principle is aptly demonstrated by considering how we handle routine car service and maintenance issues such as gasoline, oil changes, wipers, batteries, air filters, tires and brakes. There is no getting around the fact that we must replace these items at regular intervals. If we attempted to insure all of those under our auto insurance policy, just imagine how much more expensive, complex and restrictive our auto insurance would be! Certainly, routine illnesses and minor injuries, including periodic check-ups, medications and physicals would fall under this “fundamental principle of
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Asserta Health’s medEcash payment platform is the “driverless car” of healthcare payment…it’s a Better Way to Pay for Healthcare. Find out what it can do for you.
Call 855-528-2222 today to Learn More! info@assertahealth 12
Free Market Healthcare Solutions | Vol. I | Issue 1
On the demand side, Selffunded Employer plans can be designed to carve out primary care
The new model for primary care should be simple to implement, with no steep learning curves or expensive start-up costs. It should be scalable, working just as well on a large platform as in an isolated situation. of the new primary care system you seek. Fortunately, having your finger on the pulse of healthcare reform, you attended the 4th annual Free Market Medical Association Conference in Oklahoma City - the epicenter of free-market reforms - where you learned about Direct Primary Care at the DPC pre-conference workshop. You listened to an overview from DPC physicians, Dr. Lee Gross of Epiphany Health and Dr. Kimberly
100 million lives. These plans are not governed by states’ insurance commissions, and as such, are not regulated in the same way as fully insured plans. Therefore, they have the option to design their plans for utmost creativity and flexibility under ERISA law. This can include offering DPC as an option for primary care, either alone or as a choice between traditional co-pay based access or DPC.
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Armed with this useful information and ideas, you are confident you’ve found the components of an effective primary care model. So, you’re now ready to put together the details of your plan… On the supply side, Direct Primary Care (DPC) meets the criteria in which to foster “effective primary care” - without the hassle, conflicting priorities and expense of insurance-based access models – while maintaining patient sovereignty and physician independence!
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Legg Corba of Green Hills Direct Family Care. During the 2-day event, you had the opportunity to speak to a dozen other Direct Primary Care physicians, most of whom had the same message: They love the DPC model and they wouldn’t ever want to go back to an insurance-billing practice! You also got up to speed on Self-funded health plans which pay “claims” out of revenue rather than buying expensive fully insured health plans. You learned that nearly 65% of 160 million employees who have insurance in the workplace are covered under a self-funded plan, representing over
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insurance”; and therefore would be less expensive if we can find a way to access them without a middleman taking a slice of the pie. As healthcare Czar, you have access to data on prices from various non-insurance practices around the country which demonstrate that these same services, when provided outside the insurance realm, are ofttimes less expensive than the out-ofpocket residuals that some people face when they use their insurance! Not to mention, the prices are transparent and known in advance – a paramount “must-have” quality
from under the insurance edifice, thus fulfilling a fundamental principle of insurance, which is to not insure what you expect to spend and what you can afford! It looks like a perfect fit. Scalable synergy has thus been achieved! DPC and Self-insured Employers sounds like a marriage made in healthcare heaven… and you might just get re-appointed to another term as healthcare Czar!
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F R E E
M A R K E T
PIONEERS
Dr. Chris Larson | Euphora Health | Austin, Texas
by c at h y pay n e
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efore Chris Larson became a doctor, he earned a degree in finance and worked in investment banking and natural gas trading. Armed with this fiscal knowledge, and a medical degree, he decided he had worked hard for too many years to operate within the labyrinth of the health insurance system and see 35 patients per day who would feel like strangers. The solution came in stages. During his residency he moonlighted in an urgent care clinic; meanwhile, he familiarized himself with a precursor of the Direct Primary Care, the “Robin Hood” model, which allowed payments from concierge patients to subsidize care for others who couldn’t afford it. When he read about Direct Primary Care (DPC) in 2013, Larson saw an opportunity to have the best of all worlds and jumped in. He opened Euphora Health, a DPC practice, and now he is able to know his patients and their stories, give them access to quality care, and do it in a manner that is financially sustainable. One year later, he attended a summit event for Direct Primary Care providers and realized that in order to make bigger changes in the system, he needed to pivot his focus from the clinic’s individual patients to employers and self-funded programs. “The math is simple,” Larson says. “Nationally, employers are paying for 60 percent of all health care costs. Medicaid, Medicare, the VA and other uninsured pay some percentage, but employers are the major players. So I recognize that to change the industry, I needed to work with employers and invite them to pay for primary
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care in a different way. I needed to demonstrate the benefits of moving away from what they had, historically, always done.” Euphora Health operates from a menu of opportunities; from virtual and telemedicine to integrated DPC and major medical. “It’s the simple realization that ‘because it’s always been done that way’ isn’t the rule any more. In many instances, patients don’t have to see a doctor face to face. I can triple my client access by managing care over the phone. That’s the beauty of DPC. I get to know my patients and their stories so we can agree, in a conversation, if it’s time
age and wellness vectors.” As a business owner, Larson believes it all comes down to utilization percentage. Employers may pay less per person for membership, but bundled fees for groups who don’t go to the doctor often will provide more revenue than fewer individual patients who see unlimited access as a bargain. “It is also about workload,” he says. “I can double or triple my patient load with employer groups and virtual medicine, provide quality care to all of them when and how they need it, and still maintain my business.”
If you want to make change that’s bigger than your clinic, you have to be open to work with employers because they are paying the bills in America; and if you want the system to change, you have to get the people with the purse strings to change it. – Dr. Chris Larson for a refill or if another test is called for. Even then, there’s no requirement for an office visit that means more time to wait. I can call in a lab test and the patient is seen there.” Dr. Larson says he is working to replicate his DPC model with other physicians. “I see bi-modal growth curves for many providers. Some grow rapidly, having converted from a fee-for-service clinic and some have started from scratch. The first group grows quickly by converting prior patients, but for both, it is important to establish a rate schedule that is economically viable and is scaled for
Dr. Larson emphasizes that the industry is in the early stages, and he and his fellow DPCs are pioneers. “We all feel strongly about this, and people can soon expect to see doctors who don’t care so much about the old models but just want a sustainable living and a better lifestyle than insurance-based medicine could ever provide. And, for employers, health benefits are among the best ways to retain employees. DPC benefits are an incredible asset to that retention.” EuphoraHealth.com
Free Market Healthcare Solutions | Vol. I | Issue 1
Self- Funded Employers
Do you know how much of your health plan assets are being wasted? Surgery Center of Oklahoma ($)
National Average ($)
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by m e g a n f r e e d m a n
free market mavericks
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by megan freedman
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FREE MARKET MAVERICKS
THEN DR. SMITH MET JAY KEMPTON. Jay Kempton, President & CEO of The Kempton Group, a family-owned, independent Third Party Administrator, was having a crisis of faith in the U.S. Healthcare system and his ability to help his clients maintain a high level of benefits, while protecting their Plan dollars. The passage of the ACA, the persistent and sharp increase in his clients’ claims costs year after year, and the gimmicks and cost saving schemes promoted by vendors seemed to only be making the situation worse. During a yearly client meeting, a health plan member spoke up and told him he needed to call Dr. Keith Smith.
HE CALLED DR. SMITH AND SET UP A MEETING.
MAVERICK, noun, mav·er·ick, a person who refuses to follow the customs or rules; an independent individual who does not go along with a group or party. DR. KEITH SMITH. JAY KEMPTON. These names are, in many ways, synonymous with the current free market movement, and for good reason. These men are the mavericks of healthcare. When Dr. Smith and Mr. Kempton were introduced in 2011 by a mutual friend and client, they had no way of knowing that their partnership would become what it is today and create an entire movement in the healthcare space. The Surgery Center of Oklahoma (SCO) is a 32,535 square foot, state-of-the-art multi-specialty facility in Oklahoma City, which is owned and operated by approximately 40 of the top surgeons and anesthesiologists in central Oklahoma. Dr. Keith Smith always knew their prices and quality were vastly superior to their competitors, but the insurance companies didn’t care about low cost and high quality. In 2008, SCO decided to post their low, bundled, cash prices publicly on their website. Dr. Smith explains, “In the beginning, the only patients taking advantage of these amazing prices were cash pay patients and Canadians.
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Dr. Smith was convinced Mr. Kempton was ‘just another insurance guy’ there to convince him to raise his prices and let them show a great discount. Mr. Kempton was convinced that Dr. Smith was just another administrator looking to get paid the big bucks. They instead discovered a mutual passion – changing the healthcare system. Dr. Smith’s posted, bundled prices were up to 80% less than the PPO allowable, and self-funded employers could function as cash pay customers. Thus, a new partnership formed. The Kempton Premier Provider™ program was the first thing to come out of this meeting. Self-funded employers would incent their employees to use SCO for a 100% benefit. SCO got more cash-pay patients and were paid based off of a simple invoice in less than five business days. This program was not just successful, it became a movement, to eventually include more than 20,000 covered patients, 72 free market facilities, and more than 3,600 medical services.
Free Market Healthcare Solutions | Vol. I | Issue 1
What motivated you to create the FMMA? DR. KEITH SMITH: I think the FMMA was founded in our minds because deep down we knew we had stumbled onto something that was much larger than either the Surgery Center of Oklahoma or The Kempton Group. These ideas were not meant to be kept under our hat and only benefit our clients, but were so powerful and applicable in so many places, we thought everyone should know about this. We felt an obligation to promote what we had learned. It was the product of our desire to acknowledge that this movement was so much bigger than what either Jay or I alone were doing. JAY KEMPTON: Dr. Smith and I had been doing business together in this newly-minted free market fashion for several years, and we could really see the tremendous benefits that the patients were receiving, and the tremendous benefit to employer groups who were seeing tremendous savings and a greater level of transparency. Dr. Smith’s surgeons, and his surgical facility, also saw amazing benefits. It was such a refreshing way to do healthcare. Dr. Smith was being asked when he was going to franchise into their locations, and I was getting the same kinds of requests Free Market Healthcare Solutions | Vol. I | Issue 1
from folks in other states. We decided what we really needed to do is somehow form an entity which would help to essentially bring the magic that was happening in OKC, and extend it beyond the borders of Oklahoma—to be a beacon of free market healthcare that others could see, evaluate, learn about, and then follow. Creating the FMMA allowed SCO and Kempton to influence others way beyond the scope of our own individual businesses.
by megan freedman
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You are described as being very passionate about this movement; often passion is fueled by the anger of injustice. What makes you angry about the current system?
free market mavericks
The replication of this idea by other TPAs and health plans is saving hundreds of millions of dollars for selffunded employers, and state and local governments. Because of the growth, and the increasing demand for expansion into more states, Dr. Smith and Mr. Kempton decided to form the Free Market Medical Association. Their goal was to teach other providers, other TPAs, and self-funded employers how to replicate what was happening in Oklahoma. Now in its fifth year, the FMMA has members in almost every state in the U.S. and local chapters in 15 states. The FMMA team has created the #ShopHealth™ experience at www.fmma. org, where member providers can post pricing that is searchable by anyone, and the annual conference now brings more than 300 attendees from across the U.S. for a multi-day educational and networking event. When I sat down with them to discuss this crazy, multi-million-dollar-savings, grass roots crusade, it became apparent that this is their life’s calling. It was like being in the presence of the heroes of old; passionate warriors who rage against the wrongs of the world. I am still struck by their passion, commitment, and fury.
DR. KEITH SMITH: The Surgery Center of Oklahoma was founded out of frustration. Dr. Lantier and I had seen the quality of care that patients received dwindling, while the hospitals built on a wild spree. Hospital administrators proliferated, as did their salaries. The patients were receiving substandard care, and people were bankrupted by this system. I didn’t sign up to be a part of that system, and I didn’t want to be a tool in the destruction of patients’ health status or their bank accounts. The injustice and frustration is really what fueled the creation of the Surgery Center of Oklahoma. After we put our prices online and we began working with self-funded clients, we became aware of even more details of the abuses inflicted on patients and payors by the current system which vindicated our decision and our desire to take the free market path that we did. I’ve joked with clients that I wonder if we have actually had clients entertain contracting directly with us, not because they thought that it would be a better monetary deal for them, but because they were so maltreated—strictly because of the injustice. They wanted to send a message to those thieves and gangsters who had ripped them off. Injustice has fueled the buyers and the sellers in this movement. JAY KEMPTON: The thing that makes me the most angry is the scenario that we heard over and over again from our customers; that so many of their employees had not seen an increase in their actual take home pay for years. Not because of the employer being a cheapskate and not giving them raises; but that a majority, if not all, of the raise given to employees gets absorbed into the continuous upward spiral of healthcare costs. 17
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HYSTERECTOMY $34,651 Insurance Price $11,650 Free Market Price
SPINAL FUSION $153,987 Insurance Price $61,200 Free Market Price
There’s a better way. Use our free #ShopHealth tool to find free market prices and connect directly with quality providers near you. Or support the movement by becoming a member and receiving personalized price finding services, networking opportunities, and full access to our member experts.
COMING EARLY SUMMER: SHOPHEALTH 2.0 Find Out More
FMMA.ORG 1-866-901-FMMA
support@fmma.org
– Dr. Keith Smith into basically wage stagnation to employees. They say, “We’re raising our prices, but it only hurts the big insurance companies.” No, that’s never the way it works. It eventually makes it way as an increased cost to the employer. They can’t afford to just absorb the increase, so how do they offset that? By lowering or decreasing the increase of wages or they reduce the benefits, or both. Who do you think the hospital systems see as their actual customer? DR. KEITH SMITH: I think that Buyers would agree that the hospitals see the carriers as their primary customer; the giant corporate hospital is more interested in what one of the giant
going on, is disenfranchised. To the extent that the hospitals also hire the physicians who take care of these patients, is another step removed from staying in tune with what the customer and the patient really needs or desires. JAY KEMPTON: I think that’s pretty clear. They see the insurer as the actual customer. That is almost universal. If the patient ever complains about the cost of care, they are looked at as a troublemaker. “Why would you even bother yourself with that?” In some situations, you’ll get employees at the hospital who actually make the patient feel really stupid and foolish for even asking the question. The reason is because, to the hospital, even though they won’t admit this,
Free Market Healthcare Solutions | Vol. I | Issue 1
How can an employer tell the difference between a true free market vendor/facilitator and one that is merely ‘translucent’—using the movement as another gimmick? DR. KEITH SMITH: The question I always ask anyone who wants to be involved with this movement is “How do you bring value, how do you charge for what you do, and what is it that you do, exactly?” Any answer to that question that is circuitous, strange, complex, or hard to understand is a red flag that 19
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The free market is an exchange between buyers and sellers that is mutually beneficial, where both parties emerge feeling like it was a good exchange.
the patient is just a useful cog in the healthcare machine. They’re not the primary cog, just a single cog. All price negotiations are done at the insurance company level or at the network level. The really ironic thing is that the medical providers definitely view the insurance company as their customer. That is who they are really interested in keeping happy, as opposed to the patient. Providers also make the patient simultaneously sign a financial guarantee letter, which always says we’re going to hold you personally financially responsible for the entire bill, regardless of whether the patient has insurance. I have found that hospitals will never play that card unless they need leverage with an employer, TPA, or insurance company to pay more. Having the patient financially responsible is really not all that useful because their prices are so obscene that no normal patient has the capability of paying it. It’s just more of a scare tactic to leverage a patient into putting pressure on their insurance company or their employer.
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insurance companies thinks of them, and how they want to do business, than seeing the patient as their customer. It’s so upside down because, in every other business, the customer rules. The customer votes with their pocketbook and their dollars, and if somebody receives enough votes in dollars, they stay in business and do well. The patient, to the extent that is
free market mavericks
When you understand how this business really works, you can see the effect of the dysfunction which I just described; but when you learn more about the cause, you can see that the patients’ actual financial concern is not even on the radar of so many entities that are part of big healthcare. Hospitals really do not understand that the gouging of pricing that they do trickles down
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whoever is answering that question is an unnecessary intermediary, not someone who is there to facilitate an exchange between a buyer and seller. JAY KEMPTON: One of the most foolproof ways of determining whether or not a vendor is really a free market vendor is to inquire and understand how they get paid. When you find out how they get paid, you will also understand what they view as their product or their value. If they are merely “translucent”, then you will see that they are making money off of reselling somebody else’s pricing. If somebody is reselling a medical provider’s pricing for a profit, then you can see that they actually look at someone’s intellectual property as their product. That’s a problem. A vendor that is providing administrative services, negotiation services, patient advocacy, billing
assistance, bundling, payment remittance, etc. —those more tangible, valuable services—is much more willing to structure their pricing in a transparent, easy to understand format for the employer. What is the greatest obstacle that this movement and the FMMA faces? DR. KEITH SMITH: The answer may be counterintuitive. I think the greatest obstacle the FMMA and this movement faces is ourselves. We are so programmed and conditioned to look to outside leaders or to the government for solutions and answers. They are ultimately responsible for all the problems that have led to our current system. The answer is looking to ourselves and having the courage to face the possibility that, in innumerable ways, we have been duped. Admitting that is a very personal and difficult experience for many people—to look in the mirror and acknowledge that they’ve been lied to. Even worse, we have believed these lies and have
JAY KEMPTON: Two things; one of them is inertia. Objects at rest tend to stay at rest, objects in motion tend to stay in motion, and it really means the status quo. We’ve always done it a certain way. We’ve always looked at healthcare purchasing a certain way, so we’re going to be resistant to look at it differently or perform something differently. That’s probably the most benign obstacle. The obstacle that’s not so benign is how people in the healthcare business get paid. Brokers, consultants, and agents have tremendous influence over employers and patients, and the way that they see healthcare. Many people in the employee benefits business get paid when they make money off the problem. In other words, they’re making a percentage of the healthcare spend. The problem gets bigger, their income goes up. When you’ve got a vendor, or a professional, that is compensated on an inflationary type of model, and then you start talking about doing something
The free market and healthcare is the only true healthcare reform that has a chance of being sustainable. Anything else is just rearranging the deck chairs on the Titanic. – Jay Kempton
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acted accordingly. People must acknowledge that it is a ground up movement, not one where solutions rain down on us from our rulers or our leaders. They must do their own thinking and not allow those who would like to be protected from innovation to stop us.
that is different, they’re going to immediately be against it. They will think, If this really takes off and costs go down, I’m going to make less money. That’s a big problem. It’s so easy to think, I don’t want to make less money, so I have to kill this idea.
Free Market Healthcare Solutions | Vol. I | Issue 1
DR. KEITH SMITH: The one thing I would tell them is that the free market is not about sellers having their way with consumers. The free market is not about brutalizing the poor, or people who are trying to pay for their own care. The free market is about an exchange between buyers and sellers that is mutually beneficial, where both parties emerge feeling like it was a good exchange. Any time that the media quotes some corporate healthcare exec or politician bemoaning the tough future that one of the sellers might face given some policy that might be enacted should be discounted or ignored. The focus has to be on the consumer, and on whether a consumer’s decision to buy A or B is a value to that person. The one message that I would give is to
JAY KEMPTON: The free market and healthcare is the only true healthcare reform that has a chance of being sustainable. Anything else is just rearranging the deck chairs on the Titanic. It’s truly the only solution that’s going to last, whether it’s more government, single payer, price fixing, whatever, they’ve all been tried, and they all failed. Until you empower patients to look at their healthcare buying decisions the way they look at everything else, where there is a mutually respectful marketplace in healthcare, there will not be a rewarding bi-directional transaction occurring between the buyer and the seller. That’s probably a fancy way of saying that sellers will not be responsive to have high quality and low cost and the buyers will always be paying too much.
In 2008 the Surgery Center of Oklahoma began publishing their all-inclusive prices online, enabling cash pay individuals and self-funded employers to have access to high quality care at a much lower cost.
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If you could tell someone just one thing about the free market in healthcare what would it be?
know that this movement is about servicing consumers. Period. Any concerns or desires that sellers have to be protected from the preferences of consumers must be seen as the source of the problem that we all face in health care today.
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one-to-one relationship between the cost of the care and the cost of the benefits.
free market mavericks
I don’t necessarily think that all of these people are evil or malicious, but humans tend to do what they’re incented to do. If the incentives are out of alignment with the needs of the patient and the employer, it’s going to be very difficult to get people to change and do the right thing. The other big issue is the disconnect which is more of a symptom. People have a disconnect between the cost of healthcare—the actual provision of the care, the cost of the anesthesiologist, the cost of the surgeon, the cost of the facility charges, the cost of the imaging, the cost of the medicine—the cost of the actual care that is being provided. People do not equate unreasonable cost of care to health insurance costs. For some incredibly bizarre reason, people are starting to view that those two things do not have anything to do with one another. We hear repeatedly, “My benefits cost too much; my health insurance costs too much; and my benefits are not what they were five years ago.” Then, when we tell them you’re going to have to stop utilizing this particular hospital because they charge 1000% above Medicare, their response is, “You can’t tell me where I can go, or where I can’t go. How dare you question the costs of the hospital that I have chosen to use. The costs are whatever the costs should be! Whatever they bill must be reasonable because I trust them!” They will yell and scream about the costs of their benefits, the cost of their insurance, but they will give the healthcare providers a pass. In a self-funded environment, (which all of our clients are) there is a direct
Saving the Fiduciary from Themselves By Ron E. Peck, Esq.
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mployers and their advisors may soon find themselves accused of breaching their fiduciary duty if they continue to allow their benefit plans to pay inflated rates for medical services without any justification for the excessive prices. Blindly paying fees that are not revealed until after the service is provided, to practitioners who cannot explain why their rates are many times more than comparable providers of equal or greater skill, is not a prudent use of plan assets and does violate one of the core tenets of the Employee Retirement Income Security Act of 1974 (“ERISA”) and fiduciary law. For employers less concerned with risk, the decision to keep the profit that would otherwise be paid to an insurance carrier, and fund only the actual medical expenses, leads them to engage in the act of self-funding or self-insuring. Studies have shown time and again that employers who self-fund their benefit plan are more likely to save money over five years of doing so, when compared to a comparable fully insured policy. This is due in part to customizing the plan to address only that population’s needs, adjusting benefits as the data requires, quickly implementing cost containment programs, shopping around for the best vendors, stop loss, and other elements of the plan, and otherwise ensuring that a customized approach trims the fat and applies each plan dollar where it will do the most good. So, you ask, if self-funding is such a panacea,
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why doesn’t everyone do it? The answer is multifaceted, and amongst the many reasons NOT to self-fund, the one that I think is too often ignored is the matter of fiduciary authority. Indeed, ERISA dictates, among other things, that an employer who self-funds a benefit plan either acts as or appoints a plan administrator. That administrator is a fiduciary of the plan and its members, with a very serious legal obligation to perform numerous tasks – all with the plan’s best interest in mind. For some time now, (since the last major economic downturn), we’ve been hearing via mass media about situations where employees are suing employers, and their brokers, over mismanagement of 401(K) and pension plans. Indeed, these advisors are in many instances fiduciaries of these employee investors, and – in most of these cases – the employees are accusing their “fiduciaries” of wasting the plan’s (aka their) money on lessthan-advisable investments. Consider, for instance, the case of Lorenz v. Safeway, Inc., 241 F. Supp. 3d 1005, 1011 (N.D. Cal. 2017). In this class action suit, the Plaintiff (Dennis M. Lorenz) asserted claims under ERISA against the “Safeway 401(K) Plan’s” fiduciaries. Lorenz alleged, amongst other things, that the Defendants breached their fiduciary duty by selecting and investing the plan’s assets with funds that charged higher fees than comparable, readily-available
funds, and which had no meaningful record of performance so as to indicate that higher performance would offset this difference in fees. Why does this scare me? I am scared because we could just as easily take this lawsuit (and the many like it) and replace the players with members of our own industry. Health benefit plans routinely spend plan assets to pay medical bills and compensate providers that may be more costly “than comparable, readily-available [providers], and which had no meaningful record of performance so as to indicate that higher performance would offset this difference in fees.” Ouch! If I am a member of a self-funded health plan, and my administrator is taking my money, and using it to pay for a $3,000 colonoscopy, when a facility down the road would do it for $750… and the more expensive facility has an “as good” or “worse” record when it comes to quality and outcomes… wouldn’t I say: “Hey! It looks like that fiduciary isn’t prudently managing my assets.” I truly believe that, for anyone that is a fiduciary of these plans, the day participants turn on us may not be a matter of “if,” but rather, “when.” Consider also the recently filed, McCorvey v. Nordstrom, Inc. filed in the California Central District Court on November 6, 2017. In this case, a former participant in the Nordstrom Inc. 401(K) Plan sued plan executives alleging breaches of fiduciary duties in the management of the plan, and is seeking class action status for their claim. The basis of the claim, similar to the Safeway case discussed above, challenges the reasonableness of fees paid with plan assets, and further, that the plan fiduciaries failed to take advantage of costcutting alternatives. The lawsuit literally contends that the defendant failed to adequately and prudently
Free Market Healthcare Solutions | Vol. I | Issue 1
manage the plan, by allowing plan funds to be used in the payment of unreasonable fees and not acting prudently to lower costs. It doesn’t take a rocket scientist to see the parallels between these lawsuits, and out of control spending by health plans. Whether you are someone offering better care for less cost, or someone who can revise the plan’s methodologies to maximize benefits while minimizing costs, these trends in fiduciary exposure should galvanize us all to either offer help, or seek it, when it comes to prudent use of plan assets. In summary, I believe it is proper and necessary for any and all fiduciaries of these selffunded plans to step back, look for wasteful or imprudent behavior— both by the fiduciary itself, and other fiduciaries of the plan—and determine whether there is any action, option, or alternative that would constitute a more prudent use of plan assets. Likewise, those who seek to help these fiduciaries and the plan reduce their expenditures without harming the plan need to raise their voices and warn their prospective clients of the cost of not working with them. In other words, fiduciaries need to stop clinging to the status quo, and the onus is on all of us to help them do so. Ron E. Peck, ESQ. has been a member of The Phia Group’s team since 2006. As an ERISA attorney with The Phia Group, Ron has been an innovative force in the drafting of improved benefit plan provisions, handled complex subrogation and third party recovery disputes, healthcare direct contracting and spearheaded efforts to combat the steadily increasing costs of healthcare. Attorney Peck obtained his Juris Doctorate from Rutgers University School of Law and earned his Bachelor of Science degree in Policy Analysis and Management from Cornell University. Attorney Peck now serves as The Phia Group’s Senior Vice President and General Counsel, and is also a dedicated member of SIIA’s Government Relations Committee.
L E A R N . P L A N . S A V E . P R OT E C T.
RECOVERY DOLLARS MULTIPLIED
Subrogation & Overpayment Recoveries
FIDUCIARY DUTY SHIFTED
Plan Appointed Claim Evaluator - PACE
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LEGAL EXPERTISE SECURED
Independent Consultation & Evaluation - ICE Register online to join us monthly for our free, industry acclaimed webinars.
Phone: 781-535-5600 | www.phiagroup.com
SELF-FUNDED EMPLOYER’S GUIDE to finding a free market friendly tpa
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TRANSPARENCY IS VITAL TO A SELF-FUNDED HEALTH PLAN
For a self-funded employer, these costs are not monopoly money. The cost increases can mean the difference between paying claims verses giving Many healthcare providers and raises, buying new equipment, hospital systems have a great or increasing staff. Incenting deal invested in the status quo employees to use providers of healthcare. It is becoming who offer bundled, cash-based widely known that many pricing can save that employer healthcare systems are masking millions of dollars in claims in revenue streams, taking federal just a few years. dollars to reimburse themselves for ‘uncompensated care’, and relying on political favors to TRANSPARENCY maintain their monopoly status. FROM THE TPA They are bankrupting patients and self-funded health plans Transparency from an while continuously claiming independent TPA is not imminent bankruptcy. scrutinized as closely as the free Self-funded employers have market movement in the provider been forced to rely not only on sphere. However, it is just as PPO networks to give a percent important for the TPA to embrace off billed charges from these transparency in their own providers, but also on Third Party business as it is for providers. Administrators who often are TPAs generally have multiple rewarded when Plan costs are revenue streams, from high. Like the PPO networks, who commissions on a stop loss are taking a portion of ‘savings’ policy, to percentage of savings as an additional revenue stream, on out of network or third party many TPAs have similar pricing recovery. Insurance carriers strategies. masquerading as ASOs are able
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to find even more ways of hiding their compensation (especially if they also own the network, the stop loss carrier, PBM. etc.) Even though many of these revenue streams are considered standard industry practice; they are not transparent, nor are they in the best interest of the self-funded employer. ERISA requires that self-funded employers use Plan assets only for reasonable expenses. The inability to quantify the exact compensation paid to their TPA puts employers in a non-compliant position with ERISA and may violate the employer’s fiduciary responsibility to the Plan. Getting an automatic raise when your client has a poor claims year puts the TPA at odds with the best interest of the client. Self-funded employers should never need someone to ‘protect’ them from their TPA! Compensation should always be based on VALUE. Value is determined based on what is fair and equitable to both the buyer and the seller when all parties are aware of what the actual cost is.
Free Market Healthcare Solutions | Vol. I | Issue 1
1. What is your TOTAL annual compensation quoted? a. Please list all of the items included in your administrative fee b. Is your entire compensation stated up-front in our proposal? 2. Do you keep any percentage of subrogation recovery? 3. Do you keep any percentage of out of network negotiated “savings?” 4. Do you receive any commissions on our stop loss policy? 5. Do you receive any commissions or fees on any other products offered by us? PPO Networks The TPA may be utilizing carrier networks with contracts that do not allow direct contracting, have exclusivity language, or other anti-free market provisions. These agreements do not allow the self-funded employer to manage their Plan in compliance with ERISA. Handing the ‘keys’ to the Plan assets to an entity who has a vested interested in high care costs being high is a breach of fiduciary responsibility.
12. Are free market and consumer driven ideas and options presented and promoted? Plan Protection The TPA should have the Plan’s best interest in mind. 13. Do you perform large dollar claim audits to ensure that large claims are not being blindly paid? 14. How do you handle large claims where the discount is not meaningful and the PPO allowable is not reasonable? 15. Do you solely rely on a PPO discount to determine reasonableness? 16. Do you currently work directly with free market friendly physicians, providers, and facilities? a. If yes, do you charge a separate fee for this service? b. Do you keep any percentage of the ‘savings’?
WHERE TO LOOK FOR A TPA
The FMMA has members that are third party administrators. Feel free to contact our member TPAs using their contact information under your member login. Have additional questions? Visit FMMA.org or call 1-866-901-FMMA (3662)
CEDAR ORTHOPAEDIC SURGERY CENTER (435) 586-5131
6. Do you recommend using a specific PPO network? If so, why?
Randy G. Delcore, M.D.
7. Do any of your contracts with networks prohibit you from directly working with ANY provider on behalf of our Plan and in our Plan’s best interest? 8. Do any of your contracts with networks prohibit the Plan from directly working with ANY provider in our Plan’s best interest? 9. Are you willing and able to work directly with any provider in the best interest of the Plan; including negotiating up-front, bundled, transparent pricing for our employees? Education Educating your employees about what it means to be selffunded and how to shop for healthcare services based on Value is integral to the success of your Plan.
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Compensation Self-funded employers have a fiduciary duty to know and understand how Plan assets are being spent. Subrogation recovery, negotiations, PBM rebates are ALL Plan assets.
11. How often are employee education meetings offered?
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The questions included below should be part of your RFP process if finding a free market friendly TPA is important to you.
10. What type of employee education materials and meetings do you provide?
Performing outpatient joint replacements since 2004
• Least out-of-pocket costs • On-site MRI facility • Single-specialty center with highly-skilled •
medical staff Recognized in the Top 10% for patient satisfaction by SurveyVitals
• Transparent, bundled, all-inclusive pricing is found EASILY on our website
For more info, visit:
DELCORE.ORG Accredited by: Centers for Medicare and Medicaid Services & Accreditation Association for Ambulatory Healthcare, Inc. (AAAHC)
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s e l f- f u n d e d e m p lo y e r ’ s g u i d e to f i n d i n g a f r e e m a r k e t f r i e n d ly t pa
FINDING A FREE MARKET FRIENDLY TPA
COVERING THE GREAT STATE OF TEXAS
Texas Free Market Surgery Guarantee GOOD FOR YOUR BOTTOM LINE. EVEN BETTER FOR YOUR EMPLOYEES. NO TRADE-OFFS. ACCESS TO TOP QUALITY HEALTHCARE Texans receive the best care when they need it most from top-quality surgeons that excel in clinical performance and patient satisfaction
COST SAVINGS & PREDICTABILITY Lower costs and zero surprises for both employers and members with a single, transparent bundled price for common surgical procedures
EXCELLENT MEMBER EXPERIENCE Patients have access to end-to-end concierge service with zero out-of-pocket costs, so they can focus on healing instead of medical bills
Visit our employer page at TexasFreeMarketSurgery.com Call 512-275-6471
GLOSSARY The free market/transparency movement pioneered by Surgery Center of Oklahoma and The Kempton Group is beginning to have a major impact on healthcare costs around the country. The proof that free-market, transparent healthcare works is proven by looking at the dollars saved by both patients and employers. When consumers become aware that high value healthcare is far less costly, they begin to change the way they perceive their healthcare buying decisions. Healthcare services can and should be viewed just like any other purchase we make—based on VALUE, which includes both quality AND price. Whether you are a business owner providing healthcare benefits to your employees, or a consumer concerned about the rising cost of healthcare in America, only your persistent demand for transparent pricing from providers will revive a true free market healthcare system.
FREE MARKET MEDICAL ASSOCIATION
Founded in 2014 to expand on the premise of connecting selffunded employers, patients, and free market sellers (physicians, facilities, imaging providers, etc). Based on their mutual desire to change the face of healthcare, the goal of the FMMA is to bring together buyers and sellers of healthcare goods and services – reducing costs and increasing quality. The Free Market Medical Association is a non-partisan association that provides resources, support, and education to our membership, and to the public, about the free market movement and why it is so important. The FMMA helps to defend and expand the practice of free market medicine against the interference and intrusion of the government or other third parties. The FMMA membership includes both the buyers and sellers of healthcare goods and services. The FMMA connects free market minded providers with individual patients and self-funded employers who have embraced transparency in healthcare; educating physicians, self-funded businesses, third party administrators, and other health care service providers/facilitators in how to further the movement. The FMMA website includes ShopHealth, a free market shopping experience where patients and employers can search by provider type, location, procedure, CPT, and more. The site is open to the public. The FMMA now has over 300 members in 41 states, with 18 local chapters.
DPC is an enduring and trusting relationship between a patient and his or her primary care provider. In DPC unwanted fee-forservice incentives are replaced with a simple flat monthly fee. This empowers the doctor-patient relationship and is the key to achieving superior health outcomes, lower costs and an enhanced patient experience.
WHAT’S IN IT FOR PROVIDERS?
The buying and selling of goods and services is more stable in a free market. The exchanges in a free market are mutually beneficial to all parties. Any other arrangement begs for at least one party, and sometimes both parties, to be injured. A free market is conducive to competition which benefits the consumer in terms of both price and quality. Whenever the consumer has been disenfranchised in any industry, quality suffers, prices soar and what goods and services are provided are determined from the top down, rarely if ever having any relationship to what the consumers actually need (and want). Physicians operating in a free market environment find happier patients, none of whom feel as if they are being pressured to see a particular doctor, but rather exercising their choice. This provides for a healthier patient-physician relationship, fewer bureaucratic hassles, typically better pay and better outcomes.
THIRD PARTY ADMINISTRATOR (TPA)
Processes the claims and helps manage the benefit Plan for a self-funded employer. A TPA’s responsibilities include maintaining eligibility, adjudicating and paying claims, client customer service, provider customer service, utilization management, etc., plus arranging for services such as stop loss coverage, provider network access, a pharmacy benefit management company, and case management. A TPA also assists the employer with employee education.
QUALITY
DIRECT PRIMARY CARE
Many people believe that their insurance company or PPO network is looking at a Provider’s quality when they are contracting. This is not the case. The insurer is only looking at whether the provider has the correct credentialing and will accept their agreement. When a provider decides to post bundled, cash pricing and embrace the free market, they are putting their name behind that price. According to Dr. Keith Smith of the Surgery Center of Oklahoma, when a facility knows that they must use the same price for all patients regardless of outcomes, and that the bundled price is their entire compensation, providers are forced to be very efficient. Reducing complications and surgery times increases the profit for the facility. It is in their best interest to only offer the procedures that they are very proficient at performing.
policymakers across the United States. The defining element of
fmma.org/wp-content/uploads/2016/04/FMMA-Glossary.pdf
PRICING
The FMMA ShopHealth website allows free market medical professionals to post their pricing online for everyone to see! Don’t see a price for a procedure? Call us! 1-866-906-FMMA
DPC is an innovative alternative payment model in primary care embraced by patients, physicians, employers, payers and
Free Market Healthcare Solutions | Vol. I | Issue 1
CHECK OUT THE FULL GLOSSARY
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FREE MARKET MOVEMENT
free market medical association
CHAPTER DIRECTORY
FLORIDA
f m m a c h a p t e r d i r e c to r y
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FLORIDA CHAPTER Contact: Chris Markford florida@fmma.org
GEORGIA
MICHIGAN
MICHIGAN CHAPTER Contact: Theresa Mcintosh Dr. Roland Tindle michigan@fmma.org 1-866-901-fmma Facebook: michigan fmma
GEORGIA CHAPTER Contact: Dr. Robert Nelson MINNESOTA georgia@fmma.org www.Linkedin.Com/groups/7015203 MINNESOTA CHAPTER Contact: Merlin Brown, MD Facebook: georgia fmma Tyler Lowthian minnesota@fmma.org ILLINOIS 1-866-901-fmma ILLINOIS CHAPTER Contact: Colleen Ingraham MISSOURI illinois@fmma.org MISSOURI CHAPTER Contact: Denise Bennett MASSACHUSETTS Debbie Maples MASSACHUSETTS CHAPTER missouri@fmma.org Contact: Dr. Jeffrey Gold, Adam Russo, Matthew Painten NEBRASKA massachusetts@fmma.org NEBRASKA CHAPTER Phone: 781-535-5651 Contact: Pete Larson nebraska@fmma.org
OKLAHOMA
OKLAHOMA CITY CHAPTER Contact: Megan freedman megan@fmma.org Mindy Mcclure | mindy@fmma.org 1-866-901-fmma Facebook: oklahoma fmma TULSA CHAPTER Contact: Paul mackey tulsa@fmma.Org
OHIO
OHIO CHAPTER Contact: Louis Flaspohler Dr. Amy Mechly ohio@fmma.org
OREGON
OREGON CHAPTER Contact: Jack Brown Dr. Kathleen Brown oregon@fmma.org
PENNSYLVANIA
TEXAS
AUSTIN CHAPTER Contact: Sean Kelley austin@fmma.org DALLAS CHAPTER Contact: Cristin Dickerson, MD dallas@fmma.org HOUSTON CHAPTER Contact: Dr. Geetinder Goyal houston@fmma.org
VIRGINIA
VIRGINIA CHAPTER Contact: Dr. Jordan Hackworth William Grant, MD virginia@fmma.org Phone: 434-293-4995
WISCONSIN
WISCONSIN CHAPTER Contact: Dr. Kevin Tadych wisconsin@fmma.org
PENNSYLVANIA CHAPTER Contact: Dr. Nick Pandelidis pennsylvania@fmma.org
WHY BE INVOLVED IN YOUR LOCAL CHAPTER Local chapters of the Free Market Medical Association connect you with like-minded employers, physicians, facilities, industry experts, and experts in your own community. Within your local chapter, the group helps to facilitate and implement strategies, ideals, and goals that are important to you. Bringing both buyers and sellers of healthcare goods and services together to strategize, identify, and implement solutions is ground-breaking and paradigm shifting. For too long, third party vendors have kept two of the biggest stakeholders in our healthcare system apart–the providers, and the employers. Both sides recognize that the only way for providers to provide the highest value, and for employers to offer comprehensive benefits without runaway healthcare costs, is to work together to advocate for change. Your local chapter connects you with free marketfriendly providers who have embraced transparent pricing and quality. FMMA member physicians and facilities understand that helping your business succeed is an essential part of keeping the local community strong, and helps them succeed! What should you expect? Amazing conversation, new friends, expanded resources, and maybe some answers and solutions. Your chapter may meet monthly over lunch at a local business, or may choose to meet regularly by video chat or conference call, and only meet 28
in person every quarter. Each local chapter has their own schedule and topics based on what is best for the participating members, but the relationships formed are beneficial across the board. Recently, the Austin chapter held a highly successful event featuring FMMA Founders, Dr. Keith Smith and Jay Kempton, FMMA Beacon Award Winner, Texas Free Market Surgery, and the President of the Oklahoma Council of Public Affairs, Jonathan Small. The topic was Red River Rivalry, How Texas Can Beat Oklahoma in the Free Market. This event drew more than 100 attendees from as far away as 300 miles! By the conclusion, participants were fired up to be part of this community and to collaborate with fellow members to create solutions. Don’t have a local chapter in your area? You can start one! Starting a local chapter is easier than you think— simply talk to the FMMA staff, fill out some paperwork, and then invite anyone you know to sit down and have a conversation. Chapters grow steadily over time as attendees invite someone they know to the next meeting. The FMMA currently has 18 local chapters, and more than 300 members in 33 states. You may have free market warriors in your own back yard! Join the FMMA and support or start a local chapter. FMMA.org/local-chapters/ Free Market Healthcare Solutions | Vol. I | Issue 1
F R E E M A R K E T F A C T S
☛ The free market movement in healthcare is vital to fixing the problems with our country’s current healthcare delivery system. ☛ Transparency provides self-funded employers and individual patients with the information and the incentive to choose healthcare providers based on value, which includes price and quality. ☛ Our society are inundated with media, advertising, and hype that incorrectly implies that high quality healthcare is expensive. The opposite is true. The best outcomes are found at lower cost facilities due to efficiency. ☛ The free market providers involved in this movement set one price for a procedure, available to all patients. This transparency drives quality, because the providers have to be more efficient. ☛ Many free market providers offer a warranty against complications. ☛ When providers offer bundled, transparent pricing, they are able to set their own price, get paid in full, without having to file complicated claims, deal with insurance paperwork, or chase accounts receivable. ☛ Independent physicians are able to stay independent and work for their patients. There is no conflict of interest between patient needs, hospital employer contracts/ quotas, or insurance company rules. ☛ Many cash pay patients and patients with high deductible health plans find it far cheaper to seek out a free market provider, even if it involves traveling. ☛ Self-Funded employers are partnering with free market providers to offer low cost, high quality benefits. ☛For a self-funded employer, spending claims dollars only on reasonable expenses is part of their fiduciary duty under ERISA. ☛Free market providers cost up to 80% less than “network allowables” with higher quality and better outcomes. Networks and carriers are incentivized when claims costs are high due to their revenue streams. Removing these valueless third parties drives down costs. ☛Providers with posted bundled pricing compete with each other on price and quality to gain more patients. The traditional system encourages poorer outcomes as more care equals more reimbursement. ☛ Many employers are incorporating these providers into their plans and waiving ALL out of pocket costs for employees. ☛ The Kempton Group, the TPA who invented combining free market facilities and providers with self-funded employers, reports that clients have saved more than $32 MILLION since 2012 (based on 30,000 employee lives). This program has saved employees hundreds of thousands of dollars in deductibles and coinsurance. ☛ The State of Oklahoma is projected to save $100 or 200 million a year. State employees could save up to $30 million in out-of-pocket. ☛ Oklahoma County has saved $1.7 million in health care costs in the first year. County employees saved $250,000 in out-of-pocket expense. To learn more, visit www.fmma.org.
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